Vice files for bankruptcy amid digital media turmoil

Vice Media, the parent company of notable assets like Vice News, Vice TV, Refinery29 and Motherboard, filed for bankruptcy on Monday as digital media companies from Buzzfeed (BZFD) to Insider grapple with high costs, widespread layoffs and declining valuations.

Vice was once looked at as a crown jewel in the fast-paced digital media sector as newspapers declined and investors looked for new types of content to lure viewers.

The company quickly saw notable investments from media powerhouses including A&E Networks, 21st Century Fox, and Disney (DIS), which invested a reported $400 million in 2015 at a valuation between $4 billion and $4.5 billion, but took a $157 million write-down on its original investment just one year later.

The news of Vice’s bankruptcy comes after the company shut down its flagship Vice News Tonight program and cut 100 jobs last month. Previous reports from The New York Times and The Wall Street Journal revealed that stalling growth, coupled with a lack of ability to sell itself, contributed to the media giant’s demise.

According to the Journal, the company was seeking a valuation of just $1.5 billion in December 2022 — a stark fall from grace compared to the $5.7 billion valuation it received following a 2017 funding round. Vice was on track to miss its full-year revenue target by about $100 million, further complicating any potential sale.

Vice did not immediately respond to Yahoo Finance’s request for comment.

As part of the bankruptcy, Fortress Investment Group, Vice’s largest secured creditor, along with Soros Fund Management, Monroe Capital and a consortium of lenders will invest around $225 million as a credit bid.

The filing revealed the company had assets and liabilities between $500 million and $1 billion. The lenders have secured a $20 million loan in order to continue operations.

In the past year, the company reduced hiring, laid off workers, and restructured its business to help manage costs.

Yet those efforts weren’t enough to offset rising debt and expenses on top of a sky-high valuation that burdened sale options.

Monday’s bankruptcy filing comes amid continued upheaval in the media sector.

Buzzfeed shut down its news division as part of wider company layoffs late last month while Insider confirmed it would be laying off 10% of its workforce, citing “the same economic headwinds as others in our industry.”

Late last year, CNN went through a similar round of layoffs as parent company Warner Bros. Discovery (WBD) looks to slash $4 billion in costs over the next two years.

Alexandra Canal is a Senior Reporter at Yahoo Finance. Follow her on Twitter @allie_canal and email her at alexandra.canal@yahoofinance.com

 

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